May 12 (Bloomberg) -- Most U.S. stocks fell for a second day as share sales at Ford Motor Co., U.S. Bancorp and Anadarko Petroleum Corp. heightened concern that earnings will be diluted by capital-raising efforts.

The Standard & Poor’s 500 Index erased most of a 1.4 percent slide as former Federal Reserve Chairman Alan Greenspan said housing may be near a recovery and financial markets should continue improving. Pfizer Inc. led gains in the Dow Jones Industrial Average as Credit Suisse Group AG said the company may boost its dividend after buying Wyeth. Ford slid 18 percent, while U.S. Bancorp and Anadarko slumped at least 3.3 percent after selling shares or announcing plans to do so.

“In the long term these things will be positive steps for a more sound financial system, but in the intermediate or short term, they’re not shareholder-friendly,” Eric Teal, who oversees $5 billion as chief investment officer at First Citizens Bank in Raleigh, North Carolina, said of share sales.

Almost two stocks retreated for each that rose on the New York Stock Exchange. The S&P 500 slipped 0.1 percent to 908.35 at 4:09 p.m. in New York. The Dow added 50.34 points, or 0.6 percent, to 8,469.11. European and Asian stocks declined.

The S&P 500 pared losses and turned positive for almost an hour in afternoon trading after Greenspan told a conference of the National Association of Realtors that the U.S. is “at the edge of a major liquidation” of unsold properties, which may help stabilize prices. The Realtors group said earlier that the median home price fell 14 percent, the most on record, in the first quarter.

Share Sales

Ford sank 18 percent to $5.01. The second-largest U.S. automaker said it will issue 300 million shares of common stock in a public offering and use at least some of the money for a union-run medical trust. General Motors Corp., which tumbled yesterday after executives said bankruptcy has become more probable, lost 20 percent to $1.15, the lowest since 1933.

Ford’s new shares will be priced today, according to Bloomberg data. Ford had 2.8 billion shares outstanding as of May 1, so the new stock would be an 11 percent increase and raise more than $1.8 billion at yesterday’s closing price.

U.S. Bancorp fell for the third time in four trading days, declining 3.3 percent to $17.89. The sixth-largest U.S. bank by deposits raised $2.5 billion in a share sale as it plans to repay a $6.6 billion government infusion from the Troubled Asset Relief Program.

Anadarko Petroleum dropped 6 percent to $45.91 after the second-largest independent U.S. oil and natural gas producer said it plans to sell 30 million shares.

‘A Positive’

Companies announcing share sales frequently decline because the additional stock dilutes the value of existing equity and reduce earnings per share.

“The market moving more towards concern about dilution may be a positive in terms of investors’ outlook on the overall economy because they are less concerned with balance-sheet issues and more concerned with earnings issues,” said Joseph Veranth, who oversees $2.2 billion as chief investment officer at Dana Investment Advisors in Brookfield, Wisconsin.

CBS Corp. slid 7.5 percent to $7.05. A rally in the owner of the most-watched U.S. television network may not last because of declining advertising revenue and $6.9 billion in net debt, the Wall Street Journal said in its “Heard on the Street” column.

Nike Inc., the biggest maker of athletic shoes, fell 4.1 percent to $50.98. Stern Agee & Leach Inc. said investors should sell the stock because of increasing inventories and currency fluctuations.

Pfizer, Merck Gain

Pfizer added 5.5 percent to $14.93. Credit Suisse analysts said Pfizer’s purchase of Wyeth will boost the drugmaker’s earnings and sales outlook after the patent on its blockbuster cholesterol drug Lipitor expires and may result in a dividend increase. The company may also look to lower financing costs for the purchase, the analysts said.

Merck & Co. advanced 2.4 percent to $24.98. The maker of treatments for high cholesterol and bone loss entered into three credit facilities totaling as much as $7 billion to help finance its purchase of rival Schering-Plough Corp.

Fluor Corp. gained 5.7 percent to $45.66 for the second- biggest advance in the S&P 500. The largest publicly traded U.S. engineering firm reported first-quarter earnings excluding some items of $1.12 a share, beating the average analyst estimate by 21 percent.

The S&P 500 last week rose 5.9 percent, erasing this year’s loss, as results from the government’s stress tests of banks reassured investors and the pace of job cuts slowed in April. The measure’s 37 percent jump from March 9 through May 8 is the most over similar spans since the 1930s.

Rally Questioned

The two-month rally in global equity markets has been based on expectations of a rapid economic recovery that is “extremely unlikely” to materialize, according to Nobel Prize-winning economist Paul Krugman, who spoke at a forum in Shanghai today.

Economists downgraded their projections for a recovery from the deepest U.S. recession in half a century, now seeing the jobless rate exceeding 8 percent through 2011, a Bloomberg News survey showed.

Unemployment will average 8.5 percent in 2011 after a 9.6 percent rate next year, higher than previously expected, according to the median forecast in the survey taken from May 4 to May 11. The economy may expand 2.8 percent in 2011, less than estimated last month, after a 1.9 percent rise in 2010.

The S&P 500 is up 0.6 percent in 2009 after tumbling 38 percent last year, its worst annual tumble since the Great Depression.

“We’re in a bottom formation,” said Gregor Mast, an equity strategist at Clariden Leu in Zurich, which oversees about $88 billion. “Economic data and earnings are less bad and sentiment has improved but that’s not enough for a lasting upward trend. We’ll see backlashes.”

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

Last Updated: May 12, 2009 16:46 EDT